Five years ago, it was a reality of the electricity sector that companies and governments could not expect to be powered by 100% renewable energy, except under exceptional circumstances. 

The first U.S. municipality to get to 100% renewables was Greensburg, Kansas, in 2010, and that was because the city was wiped out by a tornado and rebuilt from its foundations.

But now, five factors are coming together in the energy industry to transform that reality, outlined in a new report from Clean Edge and SolarCity, the nation's leading rooftop solar installer.

Companies, including utilities, that understand the factors and embrace the shift to a lower-carbon economy will see huge economic opportunities. Those that do not will be left behind, warns Clean Edge Managing Director Ron Pernick, one of the authors of the report, “Getting to 100: A Status Report on Rising Commitments Among Corporations and Governments to Reach 100% Renewables.”

Five drivers

The report, written by Clean Edge analysts and commissioned by SolarCity, details five factors enabling companies and governments to get to 100% renewables.

Rooftop solar & utility-scale renewables

The first factor is a continued drop in the installed cost of rooftop solar that will make it widely cost-effective.

Today’s average price of $3/watt “will plunge some 40% to less than $2/watt by the end of 2017, according to Deutsche Bank projections,” the Clean Edge brief, a summpary of the report, notes.

The second driver is the continued expansion of utility-scale renewables, and the report notes power companies are playing important roles.

U.S. wind and solar were “47% of all new generation capacity in 2014 and nearly 70% in the first half of 2015,” the brief reports. Utility-scale renewables markets are also growing rapidly in the U.K., Japan, France, and Canada.

Utility-scale projects often bring together “strange bedfellows,” Pernick said. That happens, he said, when “disruptors” that develop renewables projects partner with utilities that provide equity financing or serve as off-takers.

“It is really important that the entire ecosystem figure out ways to serve corporate customers determined to meet sustainability and renewables targets,” Pernick said.

Energy storage

The third driver is the emergence of energy storage, and the impacts are just beginning to be felt. Costs, which fell from $3,400/kWh in 2010 to $1,600/kWh in 2014, are expected to continue to drop. Utilities and commercial customers are already finding cost-effective uses.

The use of new energy storage technologies, especially batteries, grew 900% from Q2 2014 to Q2 2015. As the deployment of renewables grows and batteries increasingly offer the opportunity to manage variability, demand is likely to drive a manufacturing scale-up that will put more downward pressure on costs. The 62 MW U.S. deployment for the year in 2014 is expected to be nearly 900 MW in 2019.

Net zero energy buildings

The ability to use a combination of renewables, storage, and smart connected devices to turn living and working spaces into net zero energy (NZE) buildings is the fourth driver. This “emerging efficiency renaissance,” the brief reports, will make it possible to sharply trim the 32% of global energy demand and 41% of U.S. energy demand used in the built environment.

NZE buildings generate the same or more energy than they consume. Occupants may use generation from on-site renewables or renewable energy purchased from independent power producers (IPPs) or utilities. They may also use grid-delivered electricity subsequently offset with a renewable energy credit (REC) purchase.

“A lot of the achievements have been through RECs and there have been questions about them,” Pernick acknowledged. More recently, greater accessibility has moved consumers toward onsite generation or purchased generation.

Part of the growth in NZE buildings is due to advances in construction techniques and materials, the report notes, but the emergence of smart devices that manage customer loads, like thermostats, has also made efficiency easier. Even consumers who take little interest in energy efficiency itself are attracted by the utility bill savings many of the devices can provide.

The global smart device and appliance market is forecast to go from 2013’s $33 billion to $71 billion in 2018, the brief reports. “Technologies such as smart thermostats, water heaters, lighting control systems, and sensor networks continue to open new frontiers in both residential and commercial building efficiency,” it adds.

The 21st century grid

The emergence of a 21st century grid is the crucial fifth and final factor in the rising potential of getting to 100% renewables.

“An intelligent, two-way electric grid is what ties all of these developments together,” the brief explains. It begins with smart meters, which now are 37% of all U.S. electric meters, according to Clean Edge. These enable an increasingly smart grid to make variable renewables, distributed renewables, energy storage, and smart devices effective tools in reducing demand and making renewables more reliable.

The 100% toolkit

For utilities, governments and other companies looking to get to 100% renewables, Clean Edge says the first necessary step is commitment.

“There are a number of reasons that a company may choose to go 100% renewable,” the brief says.

One is the public's increasing demand that businesses provide “environmentally friendly goods and services” and make “public commitments to ‘green’ their operations.” That means renewables, recycling, and efficiency.

Another is the growing trend of renewables mandates in local jurisdictions.

“In 2015 alone, California set a 50% by 2030 renewable portfolio standard [RPS], Vermont set a 75% RPS by 2032, and Hawaii set a 100% RPS by 2045,” Pernick said. “It just makes sense that companies doing business in those places would change their operations in response,” the brief explains.

The main reason, however, is that the transition to 100% renewables is cost effective. Early efforts were largely driven by corporations with a sense of social responsibility, but rapid cost declines for renewables and efficiency measures are making them financially attractive.

Even where costs are not quite at parity with old methods, renewables offer other benefits to offset the price difference. The hedge value of having a fixed, 20-year energy contract without fuel costs, can often justify costs, as can the promise that a building will not consume more energy than it prodices. The potential of falling costs for energy storage and smart devices make a commitment to renewables still more appealing.

“Most are not undertaking these targets if they don’t expect them to be cost-effective over time,” Pernick said. “I don’t think there will be mass adoption across corporates and governments if it isn’t cost-effective.”

The next tool is an electricity usage assessment. “Anyone who works in this sector knows it all begins by assessing baseline usage,” Pernick said. New technologies for benchmarking make that easier than ever before.

The next tool to use, after that baseline is established, is the introduction of efficiency measures. It comes ahead of renewables deployment because increased efficiency means a need for less significantly more costly installed renewables capacity.

Older buildings can be retrofitted with new insulation and insulated windows and doors, LED lighting, and more efficient heating and cooling systems that may include thermal storage.

An energy management system may be installed that includes smart meters and can offer demand response opportunities and operate a smart thermostat, smart appliances, and connected devices.

Where there is new construction, an NZE building can be targeted, and a number of energy options can be chosen: 

• leased or owned onsite renewables,
• a power purchase agreement for utility-scale renewables,
• a subscription to a community solar or wind project,
• a RECs purchase,
• a purchase of renewables through a utility Green Power or Green Energy Tariff or from an IPP

“Our experience is that clients have specific needs and requirements,” Pernick said. “This is a frame that will help determine which options are most important to an organization and which would best serve.”

The last tool that should be used, because it is not yet cost-effective or technologically mature, is energy storage. It might be grid scale or behind-the-meter, Pernick said.

The move to 100%

Those five drivers enabled the entrance of a few new members of the 100% renewables club in the United States, but other governments made the shift long ago.

Iceland, because of its uniquely enormous and readily accessible geothermal resources, has been 100% since 1982. It was joined by Tokelau, New Zealand, in 2012, Carinthia, Austria, in 2013, and El Hierro, Canary Islands, Spain, and Schleswig-Holstein, Germany, in 2014.

In the U.S., 100% renewable Greensburg was joined in 2015 by Georgetown, Texas, Aspen, Colorado, Kodiak Island, Alaska, and Rotchester, Minnesota. 

In the private sector, the Rocky Mountain Institute (RMI)-driven Business Renewables Center (BRC) is aggressively recruiting from the two-thirds of Fortune 100 companies and 43% of Fortune 500 companies that have sustainability goals. In 2014, its fee-paying members built 1.2 GW of renewables.

With a month to go in 2015, they are at over 2 GW of power purchase agreements (PPAs) for the year and the BRC installed capacity is moving steadily toward its 60 GW of renewables in the U.S. by 2030 goal.

“It is important for utilities to figure out how to provide the clean energy large corporates want because corporates, especially those with large energy-hungry data centers, may decide where to locate new facilities based on where they can obtain clean energy,” Pernick said.

Xcel Energy-Minnesota customers “want more options when it comes to energy,” President Chris Clark acknowledged in announcing a new 100% renewables option. Xcel, one the nation’s biggest investor-owned utilities, asked its regulators to approve a portion of the wind and solar capacity it will bring online in 2016 to support the program.

A utility’s way in

For the increasing number of companies, jurisdictions, and private customers demanding electricity generated from renewables, utilities have developed Green Power and Green Energy Tariffs.

The “green” product is usually more expensive than grid electricity. Offerings have had limited success except in communities with a demand for renewables or where the offering includes a long term guaranteed price.

In a newer approach, utilities may offer a renewables portfolio — typically procured from local IPPs — exclusively to bigger customers at a special rate. The obstacle in regulated markets, the brief suggests, is that the programs may impose a cost shift to non-participating customers. But “as regulatory models develop and pricing for renewables continues to decline, this solution may see more availability,” it reports.

Regulators need to help develop a structure that enables those offerings and they need to ensure the playing field is level and open to the private sector, Pernick said. But those things are likely to happen, he said. Already the most forward-thinking regulatory proceedings are working on shifts in the utility marketplace, attempting to ensure the move to a renewables-based grid is equitable and affordable for all. 

"I don’t think this discussion will be the same in five to ten years," he said. "Disruptors will be working with utilities."